If workers behave in ways consistent with standard economic models, solution(s) to principal-agent problems include financial incentives and monitoring.
Companies offer financial incentives as a type of employee perk to boost output and performance and honor accomplishments.
Employers utilize financial incentives to encourage teams and employees to perform above expectations or engage in other jobs or activities that they might not typically do.
Financial incentives are also useful rewards for recognizing when workers go above and beyond the call of duty.
Depending on the work environment and the sort of business, employers may use a variety of financial incentives.
Continuous monitoring enables the early detection of performance flaws so that corrective action can be implemented right away.
The management is aware of the employees' capacities for taking on challenges because monitoring occurs frequently.
Hence, solution(s) to principal-agent problems include financial incentives and monitoring.
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